IAG says a new deal to share 12.5 per cent of its premiums and costs with three global reinsurance giants will reduce its earnings volatility and improve its capital position.

IAG announced on Friday a much-anticipated quota share deal with Munich Re, Swiss Re and Hannover Re, that will see the three groups take 12.5 per cent of IAG's gross earned premiums and pay 12.5 per cent of claims and expenses.

In addition, the three companies will pay IAG an exchange commission in the form of a fixed fee (set on a percentage of premiums) and a profit shares.

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The deals will also mean IAG will require less catastrophe reinsurance, and will be able to reduce the amount of regulatory capital it needs to hold by $435 million over the next three years.

The deal will also boost IAG's insurance margin by 250 basis points; given the deal starts at January 1, the group's insurance margin in the 2017-18 financial year will rise by 125 basis points to 13.75 per cent to 15.75 per cent.

Mr Harmer said that since IAG signed its Berkshire deal, quota shares have become more common, but IAG would not be hunting further arrangements.

"There's lots of opportunity, but we feel we're pretty set at 32.5 per cent."

IAG shares rose 0.6 per cent to $7.18 on Friday. Mr Harmer said the company would consider capital management in calendar 2018.